From Myfinances.co.uk: Shariah law prohibits paying or receiving interest, which means taking out a mortgage is difficult for many Muslims living in the UK. There are, however, a range of mortgages which have been created to enable Muslims to pay back a loan without compromising Islamic principles.
There are three types of Islamic mortgages. Ijara Mortgages are the most common and are essentially lease-to-own contracts. The would-be buyer finds a home, agrees a price but then the lender pays for the property and becomes the owner.....................................Full Article: Source